Monsanto buys Kelco for $1.1bn

01 February 1995 00:00[Source: ICB]

MONSANTO HAS purchased Kelco, the speciality division of Merck
& Co, to boost its presence in the food ingredients and
agricultural biotechnology markets. The $1.1bn acquisition, which
will be funded by cash and debt, is still subject to US government
approval.

Fears that Monsanto paid too much for the speciality chemicals
firm, however, have been expressed by financial experts. 'The
quality of the business is unquestionably excellent,' said SW
Warburg analyst Paul Raman, but he added that 'the company may have
overpaid for the acquisition.'

Monsanto has rejected such claims, insisting the price was fair
considering 'the long-term potential of Kelco'.

'Kelco will offer significant growth opportunities for Monsanto
worldwide. We can build on its strengths, add greater productivity
through synergies and create value through growth,' said Monsanto
president Robert Shapiro.

Kelco sales were expected to reach $300m in 1994. The company
employs 1300 people in sites in the US and the UK. The sale is the
last in a series of planned disposals of non-core businesses
announced by Merck in August.

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